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Enhancing Coal Production – Advent of Real Competition. November 2013. Imperative for successful business model in Coal Mining. Maximise interest of all stake holders. Pitfalls in Captive Coal Mine (CCM) Auctioning.
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Enhancing Coal Production – Advent of Real Competition November 2013
Imperative for successful business model in Coal Mining Maximise interest of all stake holders
Pitfalls in Captive Coal Mine (CCM) Auctioning • No guarantee that power producers will be the most efficient while bidding for sale of power • Coal Block may remain unutilized till such time PPAs are awarded • Coal production may not be optimum and constrained by the demand from its power plant • Cost plus days are gone. • Sale of Power is thru’ Competitive Bidding • Developer may keep the most of benefit of having a low cost mine to himself • Under the new power procurement guidelines, no segment for CCM obtained thru’ auction basis
Modified MDO Private Player Responsible for development of mine, extraction and selling the output Coal Mine Auctioned to Bidder quoting Maximum Premium / Revenue Share subject to supplying to specific users at pre-determined price Government • Allowed to sell to specified user(s) at a pre-determined pricing formula for output approved as per plan; • Additional output may be sold in open market or designated Consignee End User • Mine ownership with Govt; Successful bidder gets control on Economic value of Coal during the Concession Period; End users to be determined by Government from time to time • MDO term to be Long Term as it is a Mining Concession • Stringent Technical Qualification requirement to ensure quality and productivity • Higher production to be incentivized at import parity price • Adjustment factor for change in actual quantity / quality if materially diff. from tender estimates